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Oil India Limited

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Oil India Limited

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  1. Oil India Limited Presentation May, 2013 Strictly Private and Confidential

  2. India’s Premier Oil & Gas “Navratna” Company Engaged in the Exploration, Development,Production and Transportation of Crude Oil and Natural Gas in India Oil India: Brief Overview • Independent India’s first commercial oil discoveries, with the first one being made in 1953 Rich Heritage • Presence across Oil & Gas Value Chain (E&P, Transportation and Downstream) • World Class Infrastructure to support growth Integrated O&G Player • Domestic acreage: 86,729 sq. km over 58 blocks • International acreage: 38,944 sq. km Large Acreage • Total 2P reserves of over 941 mmboe; with reserve replacement ratio of over 123% in FY12 Strong Reserve Base • Market cap : Rs. 35,366 cr * • FY13 Total Revenue: Rs 11,456 cr • FY13 PAT : Rs. 3589 cr Strong Financials * Market cap as on 27.05.13 2

  3. OIL Shareholding Structure Others 16.0% DII 7.9% FII 7.7 GOI 68.4% Listed on BSE / NSE Number of shares: 601.12 mn Dividend FY13 1st Interim Dividend/Share: Rs.11.00 2nd Interim Dividend/Share: Rs.12.00 Final Dividend/share: Rs.7.00 Share price (52 Week High / Low) : Rs.618 / Rs.431 Market Cap: Rs.35,366 crore Source: Company Reports. (1) Shareholding data as on 27.05.2013 (2) The share price data has been adjusted for the bonus issuance

  4. Evolution and Key Milestones • OIL enters the field of installation, commissioning and maintenance of Crude oil pipelines • Completed construction of a 401km pipeline from Duliajan to Guwahati and a 756km pipeline from Guwahati to Barauni LPG plant set-up using Turbo Expander Technology Entered into a MoU with IOCL for pursuing overseas exploration and production opportunities "Company of the year" among all Navratna and Miniratna companies at the PSE Excellence Award E&P Company of the Year Award by Petrofed for the year 2010-11 Wind energy project commissioned 1961 1959 1962–1963 1981 1982 1999 2004 2008 2009–2013 Formed as a JV with Burmah Oil Company Transformed into equal partnership JV company between Burmah Oil Company and Government of India Became a wholly owned Government of India enterprise Participated first time in NELP NRL-Siliguri Product Pipeline (660km) commissioned IPO in September 2009 raising a total of Rs.27.7 bn Received Navratna status 10% OFS by GOI 4

  5. Integrated Oil & Gas Player Transportation Downstream Production Exploration • Domestic: 65 E&P blocks • International: US, Venezuela , Gabon, Egypt, Iran, Libya, Nigeria, Timor Leste, and Yemen • New Discoveries: 19 Small to medium size discoveries (reserve size less than 30 mn bbls) during last three years (FY10–12) • 50 years of experience • Advanced recovery techniques to maximize production • FY’13 Produced 3.7 MMT of Crude oil: • 39 installations • 1,544 km pipelines • FY’13 Produced 2.64 bcm of Natural Gas: • 26 installations • 583 km pipelines • Crude Oil • 1,157 km pipeline~6MMT capacity • Multi-product • 660km pipeline;1.72MMT capacity • Overseas Pipeline • 10% stake in 741km pipeline (Sudan) • Natural Gas • 23% stake in 192 km DNPL in North East • Refining & Marketing Petroleum Products • 26% equity stake in NRL • Gas Cracker Project • 10% equity stake in BCPL • City Gas Business – • Signed MOU with GAIL, HPCL, IOCL and BPCL/ONGC PSC for 3 blocks has been signed under NELP IX NRL – Numaligarh Refinery Limited. BCPL – Brahmaputra cracker and Polymer Limited. DNPL – Duliajan-Numaligarh Pipeline Limited. 5

  6. Our Vision “The Fastest Growing Energy Company With a Global Presence Providing Value to Stakeholders” • Fastest Growing Energy Company with Highest Profitability • Delight Customers with Quality Products and Services at Competitive Prices • Team, Committed to Honesty, Integrity, Transparency and Mutual Trust creatingEmployee Pride • Fully Committed to Safety, Health and Environment • Learning Organization, Nurturing Initiatives, Innovations and Aspirations with Best Practices • Responsible Corporate Citizen Deeply Committed to Socio-economic Development in its Areas of Operations 6

  7. Strategic Plan 2020-21 Growth • Maintain & Enhance Reserves & Production from Current Fields • Accelerated Exploration Initiatives • Inorganic Growth (India and Overseas) 2012 2020 • Vertical Integration Along the Oil & Gas Value Chain • Selectively Diversify in Alternative Energy • Diversify into Unconventional Hydrocarbons • Be World Leader in the Field of IOR / EOR Decades of Experience 7

  8. Domestic Industry Environment Steady Growth in Domestic Energy Consumption Driven by India’s Economic Growth Story Energy Sources Significant Supply Deficit in the Domestic Market (1) Deficit Production (mmtoe) Energy Sources – India CAGR 10.4% (%) Source: BP Statistical Review of World Energy, June 2012. Crude Oil (mmtoe) Natural Gas (bcm) Energy Sources – Global (%) Total Consumption 162.3 61.1 Deficit 24.5% Deficit 75.1% 8 Source: BP Statistical Review of World Energy, June 2012.

  9. Robust Domestic Fundamentals Domestic Consumption Outlook % of Total Oil Consumption India: Exploration Status Strong Domestic Demand India Remains a Net Importer of Crude (1) India – A Fraction of Global Reserves (2) India – SignificantlyUnder-explored (3) • India - the 4th largest Energy consumer in world (2) • Robust long-term consumption outlook Among largest net importers of oil globally Dependence on Imports in past decade 0.65% of World’s Oil reserves (2) 0.77% of World’s Gas reserves (2) Only 22% of India well explored (as of 31 March 2011) Gas Oil FY2011 BCM mmbpd 2030 Imports81% 2005 (1) Source: MoPNG. (2) Source: BP Statistical Review of World Energy June 2012. (3) Source: DGH, HEDA report 2010. 9

  10. Domestic Asset Overview AA-ONN AA-ONN 30% 40% AA-ONN-2009/4 50% AS-CBM2008/IV AA-ONN AA-ONN 40% 50% 85% 40% 60% RJ-ONN AA-ONN 40% AA-ONN-2004/2 ASSAM +AP AA-ONN 100% 20% 16% AA-ONN 15% 75% RJ-ONN 30% AA-ONN 10% MZ-ONN 85% MN-OSN 20% Strongpresence inprospectiveEast Coast WB-ONN 25% KG-DWN 10% KG-DWN 10% KG-ONN 90% MN-DWN 20% KG-OSN 30% KG-DWN 20% KGDWN 15% AN-DWN 40% AN-DWN 40% 10% AN-DWN AN-DWN 30% 30% AN-DWN CY-OSN-2009/2 50% Significant India Presence in Regions with Proven Commercial Production or Known Accumulation of Hydrocarbons  ASSAM +AP   Kharsang       GK-OSN-2010/1 AAP-ON   + NELP I-VIII Nomination ML(s) / PEL(s)  JVC Blocks Total Area – 125,478Sq km  OIL as Operator + Joint Map Not to Scale Source: Company information. NO – Non-operator PI – Participatory Interests 11

  11. 50% 50% 25%(Sonatrach) 20% 7,087sq.km 2,710sq.km 6,629sq.km 50 sqkm US Colorado Julesburg Basin LIBYA Area 86 Area 102/4 Area 95/96 EGYPT Block 3 Block 4 6,725sq.km 2,600sq.km 25% (GSPC) 17.5% (Summit) 1,295sq.km NIGERIA OPL 205 IRAN Farsi Offshore TIMOR LISTE Block K 1,788sq.km 3,500sq.km 12.5% (Reliance) 20%(OVL) 45% 3,761sq.km GABON Shakti 3.5% 203sq.km 180sq.km VENEZUELA Carabobo 1 North Carabobo 1 Central SUDAN Pipeline 741sq.km 10% YEMEN Block 82 Block 83 1,853sq.km 364sq.km 12.75% (Medco) With Dominant International Footprint Dominant International Footprint with Balanced Presence in Exploration Acreages & Producing Properties Operator Area (Sq. km) OIL’s Participating Interest (%) Total Area –38,749sq.km 12

  12. Major Projects KG Basin KG-ONN-2004/1 ( NELP-VI) Mizoram MZ-ONN-2004/1 (NELP-VI) Block Shakthi (Onshore Gabon, West Africa) Project Carabobo (Onshore, Venezuela) Gulf of Mannar CY-OSN-2009/2 ( NELP-VIII) – • Area: 3,761.65 Km² • Less explored, geo-politically stable, oil-rich country • 2 locations released for drilling • Drilling of third well is in progress. • Area: 3,213 Sq. Km • Pre-drilling in progress, 5 locations released for drilling • 1352 LKM of 2D seismic survey completed. • 3D survey expected to start soon. • Area: 1,621 Sq. Km • Processing of acquired data completed. • Data sent for Interpretation. • 2D API 511 LKM, 3D API 1621 SQKM and three well 2D and 3D acquisition and processing completed. Two blocks (383 sq. km) in Orinoco heavy oil belt in Venezuela. Production from first well started in December,2012 Current production from three well is 1800 bopd. • Area: 549 Sq. Km • Pre-drilling in progress, 4 locations released for drilling. • Drilling of 1st well expected to start by June end.

  13. Overseas acquisitions – Focus and AvailableResources Focus for Overseas acquisitions Available Resources Dedicated Multifunctional Team pursuing M&A opportunities Utilising Expertise of International M&A Advisers and Technical consultants to identify and pursue opportunities Adequate Knowledge Base/Technical and Commercial capabilities across Organisation Strong Financial Resources (Cash/Borrowing Capability) IOCL as Partner – International network/ complete Value chain Active and Focused Management Support for M&A Balanced overseas portfolio Acquire producing/development/discovered blocks Both, Oil & Gas – Offshore/Onshore Individual Target Production level upto 30,000 boe/d Operatorship in On-shore blocks Joint operator/Active non-operator in off-shore blocks 17

  14. International Strategy International Partnerships and Alliances International Acquisition Strategy • Prepared by International consultants and adopted by Board • Seek to acquire exploration acreages / producing properties • Employ capital in the midstream and downstream, limited for the purpose of creating additional value in the upstream A Two Period Strategy: OIL focuses its international efforts to: • Launch platforms for international core areas • Acquire companies/enter partnerships as a non-operator • Build skills in new onshore, offshore and gas plays • Make organizational change to operate assets • Sustain its core areas as an Asset manager • Acquire companies and enter partnerships to grow its core areas launched in Period I • Develop partnerships with technology companies to achieve efficiencies Implement its acquisition strategy utilizing joint ventures with other leading players in the industry Partnering strategy with potential midstream and downstream investments in order to retain focus on capital employed in E&P Build Period Sustain and Grow Period Sustain and Grow Period 18

  15. Significant Reserve Base and Production Scale Total Reserves (1) Proved and Developed Reserves – Split by Type Consistent Reserve Replacement Ratio Over One Steady Production Growth 1P Reserves represent: 10 Years current production of Crude Oil 12 Years current production of Natural Gas 11 Years current production of O+OEG (mmbbl) Proved developed reserves of approximately 225 mn barrels and natural gas reserves of 199 mn barrels 473 Source: Company Information Note: (1) Data as of April 1, 2012. 19

  16. IOR/EOR Initiatives Improvement in Production Improvement in crude oil reserve (in mm bbl) (in mm bbl) OIL has made investments in excess of Rs.2425 crore in IOR/EOR initiatives during last five years 26

  17. Infrastructure to Support E&P Activities Production and Storage Facilities In-house Expertise and Integration across Energy Infrastructure Two 2D and One 3D Seismic crew Six Logging Trucks 72 Production Installations 11 Drillings Rigs 5,000km O&G Pipelines ~150k KL Crude Storage 14 W/over Rigs Excellent Oil and Gas Infrastructure Source: Company presentation 20

  18. OIL is a fully self-serviced E&P company Drilling Seismic API(2D and 3D) WirelineLogging In-House Expertise FieldDevelopment Transportation Production IOR/EOR Field/Reservoir Management Presence Across Value Chain 21

  19. Refining and Marketing Gas cracker Project City Gas / LNG projects Downstream Operations • OIL intends to continue an active strategy of vertical integration into downstream sectors such as refining, processing, distribution and retailing, cracking and fractionation of gas • This vertical integration strategy is aimed at to achieve following objectives • Diversification of revenue sources • Improving profitability by extending operations into higher-margin segments of the product value chain 26% equity stake in Numaligarh Refinery Limited (NRL). The other equity holders in NRL are BPCL and the Government of Assam 10% equity stake in Brahmaputra cracker and Polymer Limited (Assam) Process natural gas, naphtha or any other petroleum product Distribute and market petrochemical products in India and abroad • MOUs with HPCL, BPCL, ONGC and IOC for laying, building, operating or expanding city gas distribution networks. • Commissioned Wind Energy Project in Rajasthan. • LNG: MOU with Kakinada Seaports 22

  20. Strong Government Linkage Contributions to Exchequer • Government Owned Enterprise and continued government support evidenced by the recently awarded “Navratna” status to the company making it more autonomous. • 2nd Largest Public Sector E&P company • Contributed Rs.68 bn to the exchequer in the FY2011–12 • Management Independence • A Navratna company with liberty to take financial decision upto Rs.10 bn, ability to raise Rs.30 bn • Board power has been enhanced to USD 600mn for acquisition. Central Government State Government (Rs. in bn) 39.1 31.3 39.1 14.2 15.2 18.6 (1) Note: (1) Others include Service Tax, Custom Duties. (2) Others include PEL Fees and Electricity Duties. 23

  21. Plan outlay expenditure Rs/crore

  22. XIIth 5year Plan: Rs.1,90,030 mn Annual Plan 2013–14: Rs.35,809 mn Substantial Increase in Exploratory and Development Drilling Planned 3D Seismic Surveys Exploratory Drilling Development Drilling Significant Investment Lined Up Sq km No. of well No. of well 24

  23. Operating Performance 25

  24. Crude Oil and Natural Gas Production Crude Oil Production Natural Gas Production (in mm bbl) (in mm scm) 26

  25. Crude Oil Production Cost Natural Gas Production Cost OIL has the Advantage of Low Finding and Development Costs 0.25 0.27 0.22 0.19 0.08 0.08 0.09 0.17 0.08 0.08 0.89 1.02 0.96 0.94 0.89 FY09 FY10 FY11 FY12 FY13 Raising Cost Depreciation Depletion Attractive Cost Structure • OIL's integrated oil and gas infrastructure enables the company to manage costs efficiently by optimizing manpower costs, using in-house services, adapting cost-saving technology, effectively using geological data and expertise 5.45 5.51 5.19 4.02 (US$/boe) 4.22 2.4.11 3.80 3.80 2.99 2.82 FY09 FY10 FY11 FY12 FY13 Finding Costs F&D Costs USD/Barrel USD / MMBTU 1.22 1.38 1.27 8.11 1.14 1.23 7.62 8.23 7.24 6.80 2.19 2.11 1.97 1.61 1.35 0.25 0.33 0.27 0.43 0.35 5.67 5.85 5.32 5.2 5.1 FY09 FY10 FY11 FY12 FY13 Raising Cost Depreciation Depletion Source: Company Information. 27

  26. Natural Gas Pricing • Natural Gas Price at USD 4.2/mmbtu for 10000 Cal (inclusive of royalty) was last approved in May,2010. • OIL’s cost of natural Gas production is around USD 3.06/mmbtu. • Cost of exploration and Development in NELP block is much higher. • To make Natural Gas production attractive, there is need for price revision. • Govt. formed Rangarajan committee for reviewing pricing of Natural Gas. • The committee had recommended Natural Gas price as average of : • Net back Price of Indian LNG import at well head of exporting countries • Average price prevailing at major natural gas market. • For every USD one increases in Natural Gas Price: • OIL’s PAT will improve by ~Rs 220 crore. • OIL’s contribution to exchequer will be increased by ~Rs 254 crore – ~Rs 78 crore to State Govt and ~Rs 176 crore to Central Govt

  27. Rs. in crore Realised Price (USD/Barrel) % Sharing Sharing of Subsidy by Upstream Companies Rs. In cr. % Sharing 28

  28. Financial Performance 29

  29. Growing Revenue and Profit Dividend Payout Ratio Revenue Net Profit EBITDA (Rs.mn) (Rs.mn) CAGR 14.5% CAGR 8.3% (Rs.mn) (As a % of Profit) CAGR 12.5% Source: Company financials 30

  30. Leverage Remains Low Total Equity Earnings Per Share Total Debt Book Value Per Share 177,213 10,143 156,019 137,637 93,310 375 565 101 FY09 FY10 FY11 FY13 FY09 FY10 FY11 FY13 (in Rs.) (in Rs.) FY13 EPS is based on post bonus issue share capital FY13 Book Value is based on post bonus issue share capital (Rs.mn) (Rs.mn) 192,115 10,578 FY12 FY12 Source: Company financials 31

  31. Guidance: FY’14 • Increase in Exploratory and Development Drilling Meterage • Increase in Work Overs • Enhanced Water Injection • Endeavour to Enhance LPG production through NGL Recycling • Endeavour to Reduce Gas Flaring by Inducting LNG Technology 32

  32. OIL was awarded the prestigious BUSINESS LEADERSHIP AWARD in OIL & GAS SECTOR by NDTV Profit on 7th January 2012. • E&P Company of the Year Awardat the Petrofed Oil & Gas Industry awards for the year 2010-11 • First Prize for Oil Industry Safety Award in Oil & Gas Assets (Onshore) Category • Motivational Leadership Awardfor 2010–11 at the World HRD Congress • Best Environment Management and Sustainable Development Award by Indian Chamber of Commerce • Gold Award in Petroleum Sector for Outstanding Achievement in Safety Management by the Greentech Foundation • Greentech HR Gold Award 2012 for training excellence • Performance Excellence Award 2011by Indian Institute of Industrial Engineering • Golden Peacock Awardfor CSR for 2012 Awards and Accolades 33

  33. Conclusion 34

  34. Thank You